Day 14: Contract

Chris calls Day 14 “Set Up a Way to Get Paid.” This chapter
covers selecting a payment system, creating invoices, and using simple
contracts. For your contract, he says you only need to specify what you’ll do,
how much you’ll get paid, when you’ll get paid, and “any protections you
require.” Chris also says that that you can communicate all of this via email
without needing a separate agreement document.

<cringe><shudder>

While Chris is technically right, I would never advise a
client to operate their business this way. This is the type of contract that
works when nothing goes wrong; however, contracts exist to save you in two
situations:

When there’s confusion about the parties’ obligations, and

When there’s a problem or dispute.

Always Have a
Separate Written Contract

If there is situation where lawyers are needed to resolve a
dispute, the first thing I ask my client is “Where’s your contract?” If it’s a
series of emails, and perhaps some text messages, and phone calls or
conversations you claim occurred, the first part of my job will be compiling
the terms of the agreement.

When there’s a single agreement, all the terms are in one
place. And when the contract requires that all changes must be in writing and
signed by both parties, it minimizes the risk of confusion or a he-said-she-said
situation.

When you don’t have the terms of the contract in a single
document, it opens the door for complications in the future. In many cases,
it’s more cost-effective to have a lawyer create a contract template for your
side hustle than to have to hire one to piece together the terms from the parties’
communications and actions.

Minimum Contract Terms

In general, I don’t advise people to write their own
contracts (unless they have a law degree or sufficient contract experience),
but here are the basic terms I’d expect to find a side hustle contract:

Parties to the contract

Purpose of the contract

Payment terms, including what happens if the customer doesn’t pay (e.g. entrepreneurs who require ½ the fee up front and ½ upon completion)

Where and how problems will be resolved, including the venue, jurisdiction, and which state law will govern

If/how the parties can make changes to the contract

“Entire agreement” – all the terms in the contract are in the agreement

“Severability” – if the contract has any invalid terms then the parties will throw those out and the rest of the contract will remain

A provision that states if a party chooses not to use a right granted by the contract, they don’t waive their right to use it in the future

When I approach a new contract for a client, I try to
mentally walk through the customer’s journey and address the problems that the
client is trying to avoid and pre-plan how you want to deal with problems when
they occur.

Using a Lawyer for
your Side Hustle

If you’re going to have a side hustle, I recommend you sit
down with a lawyer for an hour. Tell them your goals and your budget. An
understanding lawyer will tell you about the legal issues you need to be aware
of, can do a quick trademark search to see if the name(s) you want to use are
already registered, and they can tell you want you can do yourself and what tasks
you should hire a lawyer to do for you.

A Few Final Thoughts

Thinking about what missteps I’ve seen companies inadvertently
commit, here are a few extra tidbits of information:

The terms of service for a website, online course, or mobile app are contracts. Write them or have them created with care.

Please don’t rip of another company’s terms of service and just change out the company and product names. That’s a recipe for trouble. You don’t want to represent that you do things that you don’t. I’ve also seen situations where the company’s terms of service says that it’s governed by New Jersey law and the company has no connection to that state. (The company they stole the terms from was in New Jersey.)

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I got lots of messages last week when it came out that General Mills’ legal terms said that if you downloaded their coupons, connected with them on social media, entered a contest, or purchased any of their products that you agreed to resolve all disputes with the company through binding arbitration or informal negotiation via email.

And everybody lost their minds.

I can understand requiring arbitration for disputes related to contests. I write terms of service for websites all the time and I also include a dispute resolution where my client specifies where, how, and using which state’s law problems will be resolved. I would never tell a client to write their terms in a way that dictates how they’re going to resolve problems that are not related to a website.

I think it’s ridiculous that they’d even try to tell consumers that making a purchase forces them to resolve disputes in arbitration unless those provisions are available on the packaging and in print that might make a consumer take notice. I’ve never thought to examine a cereal box for contract terms.

Thankfully General Mills saw the light and reversed its decision and voided the offensive terms this past Saturday. In a blog post, General Mills spokesperson Kirstie Foster wrote, “No one is precluded from suing us by purchasing our products at a store, and no one is precluded from suing us when they ‘like’ one of our Facebook pages.”

General Mills still supports arbitration for resolving disputes and I understand why. It can be a faster and more cost-effective way to resolve problems. However, some disputes are better left to litigation where there is the option to pursue a class-action lawsuit when the situation warrants it.

We agree to contract terms all the time. Every time we click the “I agree” button for an online service or to create an account on a social media platform, we are agreeing to the terms of the contract (even if we don’t read the terms). The next time you go to a concert or a professional sporting event, flip over your ticket and read the fine print on the back. That’s a contract. I have no problem with these contracts as long as they make sense for the situation and don’t overreach into scenarios where it would be unreasonable for the terms to extend.

My Neighborhood Whataburger

For example, I recently heard that there was a sign at a Whataburger restaurant that put consumers on notice that by eating in the restaurant, they agreed to resolve all disputes related to their dining experience via arbitration. I tried to confirm this but I didn’t see such a sign in my neighborhood Whataburger. I visited their website and didn’t see such a provision; however, I was perturbed to see terms and conditions that said:

By giving us permission to use your post or tweet, you agree that we may, at our discretion, use your real or social media user name and the content of your post or tweet (including all accompanying images) on our website to promote our company, products and services for such time period as we wish. You give us the right to edit your post or tweet for brevity, clarity and the like and to modify any image in any manner we deem necessary to use it on our website. You will not have the advance right to review or approve what we post on our website….You will not receive any compensation for granting us the above rights. We agree that you may withdraw the permission you have given us at any time by sending us an email at customerrelations@wbhq.com.

Whataburger’s Facebook page says they can use anything you post on their page but I didn’t see any similar verbiage on their Twitter profile. I think they’re trying to set themselves up so they can use anything you post about the company on social media, including editing it which I’m not too keen about the verbiage they used.

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Disclaimer

This website should only be used for informational purposes. It does not constitute legal advice, and it does not create an attorney-client relationship with anyone. If you need legal advice, please consult an attorney in your community.

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